Russia shifts its trade focus from Europe to Asia

Source: The post Russia shift its trade focus from Europe to Asia has been created, based on the article “Russia’s geopolitical pivot to Asia, a new India chapter” published in “The Hindu” on 28th September is 2024

UPSC Syllabus Topic: GS Paper 2- international relation- Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

Context: The article discusses the shift in Russia’s trade from Europe to Asia, especially with India. It highlights increasing economic ties despite challenges like sanctions, limited technology cooperation, and trade imbalances. The goal is to boost collaboration despite hurdles.

For detailed information on India-Russia Relations read this article here

Why did Russia shift its trade focus from Europe to Asia?

1. Russia cut ties with Europe in 2022, turning its focus to Asian countries, especially China and India.
2. The shift began due to Russia’s vulnerability to external political and financial shocks.
3. Economic links with Europe were affected by the Ukraine conflict, leading Russia to explore new markets.

How did India-Russia trade develop?

1. India-Russia trade increased significantly after the Ukraine conflict.
2. By June 2022, their bilateral trade was $3.5 billion. By May 2024, it reached $7.5 billion. The target is to reach $100 billion by 2030, despite challenges like sanctions.
3. Russia became India’s fourth-largest trading partner in 2022.
4. India imports Russian oil, fertilizers, and sunflower oil, helping reduce domestic costs.
5. India re-exports Russian oil to Europe, benefitting its economy.

What challenges exist between India and Russia’s economic relations?

1. Economic complementarity: Both nations focus on self-reliance—Russia on industrial production and India on ‘Make in India’.
2. Sanctions and payment issues: There are no stable payment mechanisms or logistics operators. More cooperation between banks could help ease financial challenges.
3. Technology and investment gaps: Except for the nuclear and military sectors, there are no significant investment projects. Historical collaboration in technology has weakened since the USSR’s collapse.
4. Education and research: Cooperation in STEM and social sciences is slow. More collaboration is needed to bridge knowledge gaps.

What is the outlook for India-Russia relations?

1. The Ukraine conflict drove the relationship forward, but both countries face pressure—India from external forces and Russia from economic strain.
2. Growth may come from military and civilian engineering sectors, but trade quality must improve through stronger bilateral production chains.

Question for practice:

Evaluate the challenges and opportunities in India-Russia trade relations, considering the impact of sanctions, payment issues, and technological gaps.